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Zombie Capitalism

Lenin once wrote of politics, "There are decades when nothing happens; and there are weeks when decades happen." For people around the world, rich and poor, young and old, this statement could rarely have rung more true than late in 2008 when the economic orthodoxy came down to earth with an almighty bump.

From Margaret Thatcher's insistence that "there is no alternative" to neoliberal capitalism to George Bush Senior's talk of a "new world order" our rulers had insisted that the untrammelled free market represented the best, indeed the only, way of creating a prosperous society for a generation.

These illusions were decisively shattered in 2008. Nationalisations, bailouts and enormous collapses heralded the biggest economic crisis in 80 years. Commentators from left and right were paralysed by confusion. Talk of the end of capitalism as we know it was rife. If this was the death of capitalism, however, its supporters were not prepared to let it go without a fight.

In the wake of these massive upheavals, Chris Harman's new book Zombie Capitalism is both timely and hugely valuable. Following Harman's 1984 book, Explaining the Crisis, as well as the numerous articles he has written for the International Socialism journal, it is a book that succeeds in analysing the incredibly dynamic, shifting forms that capitalism and its relationship to the state takes.

The first three chapters set out Karl Marx's basic concepts. This is done in a way that not only provides grounding for the rest of the book but also deals directly with the criticisms of many of Marx's positions, both from the standpoint of mainstream "neoclassical" economics and from within the Marxist tradition.

These chapters forcefully restate both the dynamism of the capitalist mode of production and its inequality. We see how capital, itself the accumulation of labour performed in the past, becomes reified as a system of domination that, in Marx's words, "vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks".

In its blind rush to accumulate in order to compete with other capitals, capitalism sows the seeds of overproduction, unemployment and economic crisis. For Marx, this was a central part of the system. Crises were not the result of bad choices by managers but "momentary, violent solutions for the existing contradictions".

These chapters are among the strongest in the book. Particularly useful is the way in which Harman is able to demystify the processes which are too often chalked up to the workings of "the market" or "the system" or some other term that seems beyond human comprehension. Rather, he goes to great lengths to show how these terms actually describe not metaphysical things but real relations between people that have taken on a life of their own.

By emphasising that capitalism is constantly changing the world around it and, in the process, itself, he is able to overcome objections to Marxism that rest on static assumptions: the so-called "transformation problem" of translating value into prices, or the equalisation of profit rates across the system as a whole, for example.

This understanding of capitalism as a dynamic system that ages through time informs the next two chapters, which explore the developments in Marxist theory in the years following Marx's death. Marx had noted how the recurrence of crises within the system would have the effect of concentrating more and more capital into fewer and fewer hands, as failed companies were gobbled up by more successful ones in an effort to restore profit.

These ideas were taken up by Rudolf Hilferding in the first decade of the 20th century in his book, Finance Capital. He showed concentration and centralisation of capitalism had led to the development of monopolies, arguing that "this naturally involves...a change in the relation of the capitalist class to state power".

The connotation of this change was drawn out by Lenin and Nikolai Bukharin during the First World War. The rise of monopolies led to greater interdependence between business and states, or, in Bukharin's term, the development of "state capitalist trusts". These state capitals are forced to compete on a world stage for resources and markets: "This anarchic structure of world capitalism is expressed in two facts: world industrial crises on the one hand, wars on the other."

Recognising the link between the state and capitalism is crucial to understanding the system. To hold to the idea that states are a relic of a bygone age and not intrinsic to capitalism is to ignore its actual development as a part of a global system in which states have played a defining role, from the emergence of markets through to the massive nationalisations and bailouts of the current crisis.

The binding together of the state and its domestic capitals compels the state bureaucracy to act as an agent of capital accumulation. This not only explains the actions of Western capitalist states during the Great Depression and afterwards. It is also an important underpinning of the theory, advanced by Tony Cliff, that the Soviet Union and its satellites were state capitalist - driven to accumulate in order to compete militarily on a global scale.

In turn, this global military competition saw the state channel enormous amounts of capital into arms spending. Another member of the International Socialist tradition, Mike Kidron, rigorously analysed how this spending was able to slow the rate of accumulation and thus counteract the tendency towards crisis during the so-called "Golden Age of Capitalism" from the late 1940s through to the early 1970s.

These concepts are important analytical tools if we are to make sense of the development of capitalism in the 20th century, which is the basis of the second section of the book. Though covering much of the same ground as Explaining the Crisis, Harman has jettisoned much of the more theoretical material of that work, which allows readers less well versed in economics to grasp the central dynamics of the period. The extension of the analysis to include the collapse of the Stalinist economies and beyond will be of great interest, particularly to people who would not have been following commentary on it in the International Socialism journal at the time.

The remainder of the book deals with capitalism in the 21st century and the return of the crisis. Harman explains how the delusions of unending growth during this period rested on a bubble of financial speculation and debt that would inevitably have to end.

This section will be eagerly anticipated by readers of this magazine. Accounts of the crisis put forward so far, whether by neoliberals like Martin Wolf or Keynesians such as Graham Turner, have, for all their strengths, only grasped elements of the roots of the crisis.

Harman integrates the analysis put forward by the International Socialist tradition of the collapse of profit rates after the long boom into explaining the crisis that grips global capitalism today. The failure of profit rates to recover to the levels enjoyed during the long boom in capitalism, itself the result of massive arms spending, meant that capital flowed into the financial sector, creating a virtuous circle: lending created demand; demand created more commodities, the proceeds of which went back into lending.

However, those who try to blame "finance" and bankers for the crisis, as opposed to capitalism in general, are taken to task. Harman insists that "finance is a parasite on the back of a parasite, not a problem to be dealt with in isolation from capitalism as a whole".

The notion that crises can be regulated out of existence is clearly ridiculous. However, as the collapse of Lehman Brothers showed, the sheer size of the units of capital in the modern system means that their failure can wreak havoc. This does not mean we should adopt a catastrophic view that capitalism is doomed to imminent collapse. States will throw everything they have at propping up the system.

Like the wild-eyed Dr Frankenstein channelling electricity through his creation to give it life, our rulers have ploughed untold billions of dollars into the global economy to keep it afloat, leaving us with lumbering, unstable and dangerous "zombie capitalism", threatening not only crises and war but the environmental destruction of the planet.

In a final chapter Harman makes it clear that, despite the repeated pronouncements of the death of the working class, or its inability to fight due to restructuring, workers still have the capability to resist and, in doing so, pose an alternative to the lunatic system we live under today.

This book is an essential read for anyone struggling to make that new world a reality. It is accessible for readers new to economics and will be a good jumping off-point for anyone who wants to return to Explaining the Crisis or Marx's Capital. It is also crucial for those better acquainted with Marxist theory, as it both extends the analyses put forward by our tradition in the past and sharpens our arguments for the future.